NEGOTIATIONS
Payer Rate Negotiations :
Securing The Reimbursement Rates You Deserve
In the United States , most people have health insurance , and they rely on that health insurance to cover the costs associated with medical procedures , routine doctor ’ s visits , physical therapy , and even surgery . Because of the prominence in the United States of using insurance to pay for medical expenses , medical providers must work with insurance companies to collect payments for the services rendered to their patients .
Some providers choose not to work with health insurance , requiring patients to pay cash for the services rendered . While this approach can simplify the practice ’ s billing process , it limits the number of patients who are able to access its services .
To remain as accessible as possible , most medical providers work with and bill their clients ’ insurance companies . As you can imagine , there is a push-and-pull dynamic between the two entities : physicians want to get reimbursed as much money as possible for each service offered , and health insurance companies want to pay as little as possible for the care their clients receive .
To find the middle ground , providers and health insurance companies go through payer rate negotiations on a regular basis .
WHAT ARE PAYER RATE NEGOTIATIONS ?
The phrase “ payer rate negotiations ” refers to the negotiation process between providers and health insurance companies . In these negotiations , providers are trying to optimize the reimbursement rates they ’ ll receive from the health insurance company for every type of service their practice offers . If it ’ s a radiology lab that does MRIs and X-rays , it will look something like this :
• For MRIs of the head , the provider will receive a reimbursement of $ X .
• For X-rays of the arm , the provider will receive a reimbursement of $ Y .
These negotiation processes can be very tedious , as they have to be very explicit and detailed . In addition to the reimbursement rates , these negotiations can also cover payment terms , future contract renewal details , arbitration , roles and responsibilities , and more .
WHY DO PAYER RATE NEGOTIATIONS MATTER ?
Reimbursement rates are the main source of revenue for most medical offices . In order to be able to cover expenses , pay staff , and secure all the necessary types of insurance needed in the medical field , providers need to secure reimbursement rates that are as high as possible . Better reimbursement rates lead to enhanced patient care , better health outcomes , and organizational success .
When determining payment terms — how quickly insurance companies will send reimbursements — hospitals and medical offices must consider their cash flow . If they don ’ t get paid fast enough to cover daily operating costs , they ’ ll experience business disruptions and potentially have to shut down .
Although providers are passionate about helping their patients , they have to consider the business side of the practice . As with any business , low revenue numbers and cash flow challenges can make it very hard to survive . Providers must approach payer rate negotiations with a thoughtful strategy if they want their practice to thrive .
GETTING THE BEST RESULTS
Whether you ’ re entering payer rate negotiations for the first time or navigating contract renewals , there are a few tactics you can use to optimize the negotiation outcomes :
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